LIC eyes Singapore as base for SE Asia

19/May/2008

Seeks Branch Licence There; Insurer Also Keen on US, Australia

The country’s largest financial institution, Life Insurance Corporation (LIC), eyes operations in Singapore. LIC is planning to set up a representative office first and later a subsidiary in Singapore, which could serve as its base for the region.

LIC has got the go-ahead from the Centre to set up an office in Singapore. A representative office was expected to be opened in a few months’ time after authorities there approved the corporation’s choice of a chief executive.

At present, LIC does not have a presence in the south-east Asian region. The corporation is looking at Singapore as a base. The only south-east Asian presence LIC has is a tie-up between LIC International in Bahrain and a Thai broker. The representative office is expected to open up within the next six months. It will study the market for a year and then draw up a business plan to set up its local operations.

Unlike banking, insurance licenses are easier to get. However, life insurance operations are much more capital-intensive as the business takes several years to break even. Many countries, which allow foreign investment in insurance, insist that multinationals have locally incorporated companies. In Singapore too, LIC will need to have a local subsidiary.

The corporation plans to enter Australian and US markets. It is in the process of appointing management consultants to advice on how to approach such markets.

LIC generates a sizeable business from overseas Indians through LIC International in Bahrain, which was established in 1989. The company caters to the Gulf region and has operations in all six GCC countries — Bahrain, Saudi Arabia, Kuwait and the UAE (through chief agents), Qatar (through broker) and Oman, Dubai (through branch offices).

Besides, LIC has operations in Nepal through a joint venture company between LIC and Vishal Group of companies, which was established in ‘01. In ‘03, the corporation established LIC (Lanka), a JV company between LIC and the Bartleet group.

Source: Insuremagic